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Philadelphia beverage tax vindicated again

  • Jun 16, 2017 | Gail Cole

 Two courts have now backed Philadelphia's tax on sweetened beverages.

Philadelphia’s controversial beverage tax has now been upheld by two courts. On June 14, the Commonwealth Court affirmed the trial court’s denial of a request for an injunction. The American Beverage Association, the Pennsylvania Food Merchants Association, and others have been fighting the tax since before its enactment. Although the tax is still being collected and is funding pre-K programs, an expansion of those programs is on hold while the case makes its way through the legal system.

Business is down

Some local business owners say they’ve been hit hard by the tax. Local beverage distributor Canada Dry of Delaware Valley says Philadelphia sales have dropped by 45 percent since implementation of the tax. Six local ShopRites have cut employees in response to the 15 percent drop in business; there is speculation that shoppers are buying their sugary beverages outside of the city, where they’re also filling their carts with staples. Seeing its impact, a local chapter of the Teamsters expressed anger and disappointment at the court’s affirmation of “the city’s reviled and discriminatory beverage tax.”

City revenue is up

But not everyone is suffering from the tax. Its revenue is enabling 2,000 low-income children to attend pre-kindergarten programs — kids that otherwise would probably be “home watching TV on the couch.” Philadelphians for a Fair Future are applauding the court’s decision, noting that in addition to pre-K seats, its revenue will “rebuild recreation centers, parks and libraries in neighborhoods all across the city.”

Another potential benefit: consumption of sugary drinks could decrease because of the tax. The American Medical Association stands behind taxes on sugary drinks. Its delegates are calling on “state and local medical societies to support the adoption of state and local excise taxes on sugar-sweetened beverages, with the investment of the resulting revenue in public health programs to combat obesity” and other health problems caused by consuming such drinks.

The battle continues

Opponents will continue to battle the tax, with the next step a plea to the Pennsylvania Supreme Court. Supporters will continue to back it. Upon hearing the court’s decision, Mayor Jim Kenney said, “Our entire city desperately needs us to be able to move forward with the programs funded by the tax and we will be unable to do that in full until full legal action is resolved…. The beverage industry should not ask our children to wait another minute.”

Thirsty for more information about soda taxes? Find it here.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.